Indian real estate market may not be showing the kind of growth that was expected of it but, the luxury homes segment is surpassing expectations. Ashwinder Raj Singh, CEO – Residential Services, JLL India gives a brief outlook of the surging luxury housing in India.
Luxury home buyers in India of yesteryears were content with an address to boast of along with whatever additional facilities money could buy. However, times have changed; more and more Indians are now travelling abroad and getting a taste of what the high life means in other countries. Consequently, their expectations now extend beyond just a fancy town-side address. Though the address is still important, luxury home buyers now also expect to buy into a lifestyle that, by definition – only a few in the world can afford to have.
Super Luxury Segment: India’s richest, apart from ‘the’ address want private gymnasiums, swimming pools and gardens, complete home automation, interiors based on Mediterranean or Italian architecture and highly advanced home security. The builders are happy to comply and are building such super-luxurious homes wherein price is not a constraint. Exclusive super-luxury homes take longer to be built and also to be sold. This is a high investment arena wherein exclusive customizations are the norm, and both developers and buyers take their time to ensure that the deal results in complete satisfaction to all involved.
Affordable Luxury: India is a massive country with a correspondingly broad bandwidth of budget-led sub-categories for luxury homes. Thus, the luxury residential market is not solely targeted at the super-rich. Affordable luxury is probably the most interesting – largely because though it appears to be a contradiction in terms, it works very well indeed.
The affordable luxury homes segment is somewhat diluted but nevertheless a luxury experience available to middle-to-upper middle class buyers, in locations where their money can buy more space.. The swimming pools, clubhouses, gymnasiums, etc. come in the form of shared amenities and the residents enjoy the company of their peers from fairly high-salaried professions. Another interesting aspect is that developers of such projects often shoulder the additional responsibility of introducing the whole concept of luxury to buyers who do not have any prior exposure to it. In affordable luxury, sales in this segment happen fairly quickly thanks to the less exuberant price tags.
Branded Homes: Most large Indian developers come from a background of catering to the mass market for several decades and have no expertise in the super-luxury homes segment. A preferred shortcut to experience under such circumstances is partnership with a global luxury brand. Apart from the knowhow, such brands also bring with them an aspirational value that immediately connects with the super-rich as also gives a developer’s luxury project an extra edge.
Buyers of ‘branded’ super-luxury homes get to take a shortcut, too. As far as they are concerned, they are buying instant prestige with an exotic label at a special location, and an international lifestyle right here in India. Despite the fact that the competition in this segment is heating up, branded luxury homes are a profitable venture for builders, as the returns are enormous when compared to ‘baseline’ luxury or affordable luxury housing projects.
Branded luxury homes are especially in vogue with NRIs and PIO HNI investors, who prefer such properties for the simple reason that they get an assurance of the quality of services which they are used to in their adopted countries. Also, with the backing of a well-known brand, they can expect better returns on their investments which are better than the prevailing market rates.
The concept of luxury homes in India is becoming more democratic, and striving hard to have relevance to a wider cross-section of the population without losing its intrinsic ‘upper crust’ appeal’.
What has not changed is the fact that the luxury homes segment is where everyone – developers and investors alike – can look at fat profit margins, a fact which more than makes up for the slower sales. For players who are into luxury housing for the long haul, very little can really go wrong. The stakes are definitely high, but very few developers actually rely exclusively on luxury – most of them are very active in mid-segment housing, as well.